Question
Nick is a 45 year-old estate planning attorney who comes to you for some retirement planning help. His current salary is $125,000. Nick tells you
Nick is a 45 year-old estate planning attorney who comes to you for some retirement planning help. His current salary is $125,000. Nick tells you he would like to assume an 87.5% Wage Replacement Rate, and his most recent Social Security statement shows he will receive $2,750 a month from Social Security. His current 401(k) account stands at $215,000.
Nick would like to retire at age 67, and he expects to live until age 95. You believe that Nick's 401(k) portfolio can earn 9.5% on an annual basis, and that an inflation rate of 3% is a good assumption. How much does Nick need to save at the end of each month, using the annuity method, in order to retire at age 67?
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